10-QPeriod: Q1 FY2014

WELLTOWER INC. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 8, 2014For Securities:WELL

Summary

Health Care REIT, Inc. (WELL) reported its first quarter results for the period ending March 31, 2014. The company, an S&P 500 REIT, showed revenue growth driven by increases in both rental income and resident fees and services. Total revenues increased significantly year-over-year, reflecting strategic acquisitions and property development. The company's balance sheet indicates substantial real estate investments, with net real estate investments standing at $21.6 billion. Borrowings under its unsecured line of credit increased substantially compared to the prior year-end, indicating active use of revolving credit facilities for operational needs and investments. While total liabilities increased, the company maintained a strong equity position, though total equity saw a slight decrease from the prior year-end. Diluted Earnings Per Share (EPS) for the quarter was $0.17, a decrease from the prior year's $0.21, impacted by a shift from gains on property sales in the prior year to ongoing operations in the current period. WELL demonstrated continued investment activity in the quarter, with significant cash invested in real property acquisitions and construction. The company also declared an increased quarterly dividend, underscoring its commitment to returning capital to shareholders. Despite the strong operational performance and strategic investments, investors should monitor the company's debt levels and its ability to service them, as well as potential impacts from healthcare reimbursement policies.

Financial Highlights

35 data points
Beta

Revenue

$801.81M

Net Income

$65.20M

8.1% Net Margin

EPS (Diluted)

$0.17

Total Assets

$23.21B

Cash & Equivalents

$185.93M

Free Cash Flow

$258.66M

Financial Statements
Beta
Revenue$801.81M
SG&A Expenses$32.87M
Operating Expenses$729.25M
Interest Expense$120.83M
Net Income$65.20M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)290K
Shares Outstanding (Diluted)291K

Key Highlights

  • 1Total revenues for the three months ended March 31, 2014, were $801.8 million, a significant increase from $629.7 million in the same period of 2013, driven by rental income and resident fees.
  • 2Net real estate investments stood at $21.62 billion as of March 31, 2014, reflecting the company's core asset base.
  • 3Borrowings under the unsecured line of credit increased from $130 million at December 31, 2013, to $562 million at March 31, 2014.
  • 4Diluted Earnings Per Share (EPS) attributable to common stockholders was $0.17 for the quarter, down from $0.21 in the prior year period.
  • 5The company declared and paid a common stock cash dividend of $0.7950 per share for the quarter, an increase from $0.7650 per share in the prior year.
  • 6Cash disbursed for acquisitions was $55.04 million for the quarter, a significant decrease from $1.79 billion in the prior year period, while cash disbursed for construction in progress increased to $52.72 million.
  • 7The company maintained compliance with all debt covenants as of March 31, 2014.

Frequently Asked Questions

Health Care REIT, Inc. (WELL) appears to be in a solid financial position. The company generated significant revenue growth, maintained a substantial real estate asset base, and continued its investment strategy. However, it also saw an increase in its unsecured line of credit borrowings and a decrease in diluted EPS compared to the prior year, which are points for investors to monitor. The company's compliance with debt covenants is a positive indicator of its ability to manage its liabilities.

Revenue performance improved significantly. Total revenues increased by approximately 27% to $801.8 million for the three months ended March 31, 2014, compared to $629.7 million for the same period in 2013. This growth was primarily driven by higher rental income and a substantial increase in resident fees and services.

The company's primary uses of cash include dividend distributions to stockholders, debt service payments (principal and interest), real property investments (acquisitions, capital expenditures, construction), loan advances, property operating expenses, and general and administrative expenses. For the three months ended March 31, 2014, cash used in investing activities was significant, largely due to investments in real property and construction.

The company saw a substantial increase in its borrowings under its unsecured line of credit, rising from $130 million at the end of 2013 to $562 million by the end of the first quarter of 2014. While senior unsecured notes and secured debt amounts remained relatively stable, the increased reliance on the line of credit may indicate a strategic use of short-term financing for operational needs or upcoming investments.